Casino recovery still mild; Recession: The Sequel

Casinos that have reopened in Las Vegas, Louisiana and Mississippi are seeing fewer customers—but higher value ones. That’s the bottom line of a new report from JP Morgan analyst Joseph Greff, who cites data tracked by Visitdata.org. Foot traffic is “significantly lower” than pre-pandemic levels. How much lower? 47% in Clark County, 32% in Louisiana and 18% lower in Mississippi. However … “duration of visits has been tracking higher in Clark County and Mississippi, up 15% relative to pre-COVID levels in February, which we think is supportive of higher quality, more dedicated players being the first to return.” Greff adds that “we view these visitation results as broadly encouraging and likely better than previously feared,” although the much-ballyhooed “pent-up demand” now appears to have been a brief spurt.

“On Sunday, June 7th, estimated visitation to casinos in Clark County was ~374,000, or ~71% of the daily average in February 2020 (i.e., 30% lower); to put this in perspective, daily visitation to Las Vegas has historically been ~3% higher in June than in February.” On the flip side, casino visits are now averaging 53 minutes, up from 45. (More time on device, the Holy Grail of casino number-crunchers.) They’re not staying as long in Louisiana, the state that has been open the most, so perhaps we should look for some dilution in the near future. Ah well, you know what they say about half a loaf.

Why are we settling for less than a full loaf? Perhaps it’s because the United States entered a recession in February, according to the National Bureau of Economic Research. So less casino visitation could have as much to do with a dearth of disposable income as an abundance of caution. The NBER usually waits twice as long to declare a recession but the floor fell out of the U.S. economy so quickly it evidently felt impelled to act. It has never declared a recession so fast in 41 years. “The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions,” the report read.

Employment is in the tank, as is gross domestic product. Ditto business solvency. Most recessions constitute six or nine months of negative economic growth. This one took three. Call it the Insta-Recession. Still, economist predict “sharp” recovery in 3Q20, which may or may not depend on whether Coronavirus makes a feared comeback. The financial savants are pinning their hopes on increased American travel (the international sector appears to have been written off) and reopened businesses. Reports CNN, “The Federal Reserve is taking steps that make its response to the 2008 financial crisis look tame. The Fed has slashed interest rates to zero, promised to buy an unlimited amount of bonds and rolled out a series of emergency lending programs.” Wall Street believes things are back to normal, although we can tell you for certain that it’s far from so on Main Street.

* Michael Gaughan is famously counterintuitive. For example, when resorts were canning workers by the thousands after 9/11, he hired. When the Mesquite market was in the tank, he invested and turned it around. Now he’s rumored to be adding 55,000 square feet to the casino floor at South Point. The goal is to make it the biggest casino in the world. We think Venetian Macao currently holds that honor (or is it WinStar in Oklahoma?). Whatever the case, Gaughan never thinks small so we don’t put it past him.

* How badly do you want to contract Covid-19? Enough to pay $4,362? An unnamed Nevada resort is advertising a “Sex Island Coronavirus Party.” (Wait ’til Steve Sisolak hears about this.) Your money buys you unlimited intercourse, plus as much booze and marijuana as you can consume. What could go wrong? The, er, event will take place June 19-21 and is apparently going forward even though brothels haven’t been cleared to reopen. You’ll be picked up at an airport and taken to “a private location.” Since tours of Las Vegas casinos are being offered, we can deduce that the mystery locale is probably somewhere near the bustling metropolis of Pahrump. It’s being run by Good Girls Company, which promises that all its girls are “STD free,” although nothing is said about Coronavirus. GGC claims to have special dispensation from the state but we’d like to see that in writing.

Jottings: In case any of its guests haven’t gotten the message, Caesars Palace has outfitted its iconic statue of Julius Caesar with a PPE mask. And not just any mask—a gold one … The alternately waxing and waning fortunes of Vladivostok‘s Tigre de Cristal casino are waxing again. VIP junketeer Suncity Group Holdings just bought a $160 million piece of Tigre de Cristal … Someone just laid down a $1 million wager on UFC fighter Amanda Nuñes. Why is this important? It’s the biggest bet ever placed on a MMA bout. Reports Sports Illustrated, “Nunes’ odds were at -600 at the time of the bet, meaning a win would pay out a total of $1,166,666.70” … Kudos to Wynn Resorts for a special thank-you gesture to first responders. It is offering one night free to hospital and medical workers, police and firefighters. Those who want to stay additional nights get the Wynn Insider rate—plus resort fee. Could you have waived that, Matt?